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More public-comment meetings slated for proposed CareOregon/SCAN merger

Details on potential effects of the pending deal remain hazy as a California nonprofit Medicare insurer moves toward absorption of a major provider of health care to low-income Oregonians
November 14, 2023

The Oregon Health Authority is holding more meetings for public comment on the proposed merger of Portland-based nonprofit insurer CareOregon, which serves 500,000 members of the Oregon Health Plan, into California-based insurer SCAN Group — although only limited information about the deal has been disclosed.

In announcing the new meetings, the OHA said public feedback “can help us understand how this transaction could help or harm people in your community.” Of the 16 regional care organizations contracted by the state to serve low-income members of the OHP, CareOregon either operates or is part of three of them, located in the Portland metro area as well as Southern Oregon and the Tillamook County area.

But neither non-profit CareOregon or SCAN have disclosed much about how the transaction could affect CareOregon’s 500,000 OHP members and the broader Oregon community. The two entities say they have not yet made many decisions about what they would do after the merger is approved.

They have spelled out some elements in submittals to the state, however: Non-profit SCAN would create a new non-profit entity, HealthRight Group, and SCAN and CareOregon would become arms of that. To join HealthRight, CareOregon would pay the new entity $120 million. The money would come from the $1 billion in investments and cash that CareOregon has built up in recent years from the profits of its business providing coverage under the Medicaid-funded Oregon Health Plan to residents in the Portland metro area as well as Southern Oregon and the Tillamook County area. CareOregon has a net worth – all assets minus all liabilities – of $712 million, held mostly in stocks, bonds and cash, according to its most recent financial filings. 

CareOregon provides Oregon Health Plan coverage in three main markets. In two markets – the Jackson County and Tillamook areas – CareOregon provides the insurance through coordinated care organizations it owns; in the Portland market, CareOregon provides coverage as part of a separate non-profit coordinated care organization, Health Share of Oregon. The coverage is funded by the Oregon Health Authority with state and federal taxpayer money.

The Oregon Health Authority is reviewing the proposed merger and will make a recommendation to the Oregon Department of Consumer and Business Affairs, which, as Oregon’s insurance regulator, makes the final decision.

The “listening session” focused on Tillamook, Clatsop and Columbia counties, where Oregon Health Plan coverage is provided via CareOregon’s Columbia Pacific Coordinated Care Organization, takes place Tuesday, November 14 from 9-10 a.m. via Zoom. Registration is here:

Register for the Zoom session  

The session for Clackamas, Multnomah and Washington counties, for insurance provided via Health Share of Oregon, is on Wednesday, November 15 from 4-5 p.m. via Zoom, with registration here:

Register for the Zoom session

The session for Jackson County, where CareOregon’s Jackson Care Connect provides Medicaid insurance, is Thursday, November 16 from 4-5 p.m. via Zoom, with registration here:

Register for the Zoom session

The state is also soliciting written comments, which can be submitted via email to: [email protected].

The hearings are part of OHA’s review effort to determine whether the merger would have unfair effects, or raise health care costs or hurt care. These listening sessions are part of one process being held by the health authority. It has already held two listening sessions as part of its other process overeen by the Health Care Market Oversight office, which is also accepting comment at [email protected].

But throughout the application process, few specifics have been disclosed to the public.

Documents submitted as part of the two nonprofits’ application for approval of the deal show that CareOregon has not told state regulators exactly how its operations would change under the new arrangement. SCAN officials say SCAN might seek to expand and provide Medicare insurance in Oregon and Washington, but that it is too soon to be certain. Representatives of the two entities said they have not shared detailed finances with each other. And they have not released to the public any post-merger financial projections.

Large portions of the filings with the Oregon Health Authority have been blacked out or withheld from public disclosure because they are deemed confidential. A public records law request by The Lund Report for more information is pending.

Officials with the two nonprofits assert their merger would benefit Oregonians. They said in their joint filing that as nonprofits they are better positioned to provide quality service to Medicaid members, compared to for-profit insurers that employ “unsavory behaviors” in order to reap high profits from their Medicaid business. 

Already, the state has received a mix of opinions in its public comment process.

CareOregon has made big profits on its Medicaid work, especially during the pandemic. Hospitals and other health care providers reduced their services to patients, which dampened the expenses of Medicaid insurers such as CareOregon, even as the state increased payments to Medicaid insurers.

In 2022, CareOregon reported $80 million in operating profit on revenues of $2.4 billion.

Non-profit SCAN Group is also wealthy. It focuses on providing Medicare insurance plans for the elderly in California, Arizona, Texas and New Mexico. It serves 270,000 members. In 2021, the latest year for which full information has been released, it had an operating profit of $82 million on revenues of $3.6 billion. Its net assets stood at $1.2 billion, mostly in investment portfolios of stocks, bonds and cash.

You can reach Christian Wihtol at [email protected]